Coforge's Strategic Acquisition of Encora to Forge $2.5 Billion AI & Cloud Services Leader
In a significant development for the IT services sector, Bengaluru-based Coforge has announced that its acquisition of US-based Encora represents a defining strategic move to establish a large-scale, AI-driven engineering and cloud services business. The combined entity is projected to achieve a pro forma revenue base of approximately $2.5 billion upon completion of the transaction.
CEO Outlines Vision for AI-Driven Growth and Market Leadership
Speaking during the company's post-earnings media call, Chief Executive Officer Sudhir Singh emphasized that this deal strategically positions Coforge to capitalize on a fundamental transformation in global technology services demand. Enterprises are increasingly moving beyond preliminary AI experiments to demanding tangible, measurable business outcomes at scale.
"The era of AI experimentation has concluded. Our clients are now insisting on demonstrable proof of business impact, measurable improvements in key performance indicators, and clear, actionable roadmaps for operational transformation," Singh stated, highlighting the shifting market dynamics.
Financial Structure and Integration Roadmap
Encora, which is nearing an annualized revenue of $600 million, is expected to maintain a growth trajectory at least equivalent to Coforge's own pace. On a pro forma basis, nearly $2 billion of the merged company's revenue will originate from AI-led engineering, data, and cloud services, establishing these domains as the core pillars of its future strategy.
Coforge has clarified its financing approach for the acquisition. The company will not issue new equity to refinance Encora's existing debt of $500 million. Instead, it has secured debt funding from a consortium of five banks at a mid-single-digit interest rate. Singh assured stakeholders that "there will be no earnings per share (EPS) dilution" as a result of this financial arrangement.
The integration process is estimated to incur costs between $10 million and $15 million, covering financing, legal, and advisory expenses. These costs will be accounted for over the first two quarters of the fiscal year 2027.
Strong Quarterly Performance Underpins Strategic Move
This ambitious acquisition follows a period of robust financial performance for Coforge. The company reported revenue of $478 million for the December quarter, reflecting a sequential growth of 4.4% and a significant year-on-year increase of 21.5% in constant currency terms. This solid foundation provides the financial strength and market confidence necessary to undertake such a transformative merger.
The strategic combination of Coforge and Encora is poised to create a formidable player in the global IT services landscape, specifically engineered to meet the escalating demand for advanced, outcome-driven AI and cloud solutions.
